Improving carbon pricing is key to energy challenge, say FT readers
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
When we launched The Energy Transition series of special reports in June, we invited FT readers’ opinions on the challenges posed by growing global demand for power in the coming decades.
The problem of how best to meet this demand, while still mitigating man-made climate change, goes to the heart of this series on the pressure for reform within the sector.
We received 565 reader responses. They came from around the globe, with around 40 per cent from the UK, a little under a quarter each from North America and continental Europe, and the rest from readers in Asia, the Middle East, Latin America and Africa.
The results suggest that FT readers overwhelmingly view energy as a key topic of geopolitical importance. They also show that readers believe governments will increasingly need to co-ordinate their actions to meet energy challenges.
However, opinions are divided over the speed with which fossil fuels will be replaced with greener forms of energy as are views on the best policy options to tackle climate change.
A total of 94 per cent of respondents either agree or strongly agree that energy is a topic of key geopolitical interest, while 84 per cent in total agree that climate change plays an increasingly important role in energy policymaking.
Opinion is more divided on the transformation in the energy mix towards renewables. Some 43 per cent of the respondents believe that fossil fuels will remain the dominant energy form over the next 50 years — more than the 34 per cent of those questioned who disagreed or strongly disagreed with this statement. Just over half of readers in the US agreed.
There appears to be recognition of the growing role that natural gas, the least polluting of the major fossil fuels, might provide in meeting global energy demand among respondents.
Despite some green energy forms becoming more commercially attractive without subsidy, many respondents believe that renewables are not viable without continued government support. Some 48 per cent agreed or strongly agreed with this proposition but a large minority — 32 per cent — disagreed that government backing is necessary.
Solar and wind power attract the most support as alternatives to fossil fuels, closely followed by hydro power, a well-established energy source that still attracts new projects.
Nuclear power, despite the international backlash created by the 2011 Fukushima disaster in Japan, as well as controversy over high costs and delays in new reactor projects in Europe, is supported by nearly 60 per cent of respondents.
Burning biomass is seen as a legitimate alternative by less than 20 per cent of those surveyed. That is despite claims by advocates that biomass should be treated as a low-carbon energy source, because it relies on being balanced by carbon captured from the earth’s atmosphere — assuming it is culled from plant stock which is sustained with new growth.
Carbon capture and storage, a technology that prevents emissions from burning fossil fuels entering the atmosphere to contribute to climate change, is supported by just a quarter of respondents. Despite support for its development among coal, oil and gas producers as a way of ameliorating their emissions, it remains an unproven method of mitigating carbon dioxide levels at large scale.
Although this report discusses the role campaign groups and other non-governmental organisations have in leading debate about the energy transition, they are not seen as the most important agencies leading on action and responsibility.
Governments and regulators (77 per cent) alongside consumers and the general public (67 per cent) lead the pack in terms of the stakeholders that respondents believe are important in shifting use away from fossil fuels.
Energy producers themselves (39 per cent), heavy industrial consumers of power (34 per cent) and business in general are seen by large minorities as important.
As pressure mounts on pension schemes, sovereign wealth funds and other institutional investors to divest from oil companies and coal producers, just under half of the respondents among an FT readership survey (45 per cent) saw a role for investors in helping drive a transition in energy use.
The correct application of carbon pricing on fossil fuel use has emerged as the most popular policy tool among the respondents to achieve the transition towards low-carbon energy supply.
Some 28 per cent ranked the application of a “true price” to carbon use as the best policy measure among seven options put to them. Over half of the readers surveyed included it among their three most favoured policies.
Tighter regulation of air pollution is the second most popular ranked policy tool (18 per cent), closely following by those who prioritised tougher fuel and energy efficiency standards as their favourite policy tool (15 per cent).
Subsidies for renewable power and energy storage were ranked among the top three policy options by just under half of respondents, making this the fourth most popular policy measure judged by inclusion on survey subjects’ “top three” selections.
Subsidies for improving energy efficiency in homes — often considered one of the most cost-effective ways of reducing use of polluting fuels — attracted modest support, appearing in just 30 per cent or readers’ “top three” rankings. Outright bans on internal combustion engines and coal-fired power stations also received limited support.
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